How Corporate Cash Hoarding Affects Your Receivables

In his article on corporate cash hoarding, Wall Street Journal reporter, John Bussey, asks his readers to “Blame Fear, Not Greed, as Firms Hoard Cash.” Bussey addresses a key problem that directly concerns small business factoring clientele across all industries. Bussey imagines cash-hoarding as a threatening economic measure “of what global business thinks about our times. It isn’t pretty. And, despite what some suggest, it doesn’t appear to be guided by greed or complacency.”

Standard & Poor’s analyst, Howard Silverblatt, estimates that “industrial companies are sitting atop 70 weeks of net operating cash.” That is equal to one year and five months’ worth of spending money that could potentially be owed to you. Companies’ decisions to hide “extreme excess cash,” Silverblatt says, are “reflecting the uncertainty of the times.”

Their cautious, even fearful, decisions to withhold cash come at two expenses. For one, their interest rates have gone down to “a tiny 0.8%, well below the rate of inflation. Bussey, the author of the article, cites “a political price, too. President Barack Obama, the AFL-CIO and others have admonished companies to spend more to create jobs.”

Most important to our factoring clientele, however, is the implication that corporate fear has for their firms: When companies hoard cash, they pay their bills slower. We at the Factoring Blog suggest taking a page out of the corporate playbook. Whether your business is in need of medical staffing factoring, aerospace staffing factoring, military staffing factoring, healthcare staffing factoring, education temporary staffing factoring, manufacturing invoice factoring, trucking or freight factoring, or any other industry, we would be happy to help you hoard cash of your own.

Staffing factoring can help with both cash flow and savings. Of course, a factor’s primary function is to help you pay off your primary expenses. If your corporate customers are slow to pay, your best choice may be to have a factor buy your account receivables for a nominal fee.

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